GM and Chrysler Won't Be Required to make Electric Cars

Posted: Nov 20, 2009 09:31 a.m.

After the government bailout of Chrysler and GM left the feds in charge of many areas of the companies, there were fears that politicians and bureaucrats would start dictating each company’s product line. The Obama administration is saying that's not the case.

Reuters reports, "The Obama administration's preference for robust electric car production will not influence its oversight of taxpayer equity in General Motors and Chrysler, an administration official said."

As much as the administration would like the companies to focus on clean, alternative fuel cars, they won't be forced to.  Instead, Chrysler and GM can analyze the markets and build the cars that make the most sense to return them to profitability.

Autoblog Green says, "While the U.S. as a whole would benefit if the cars on the road were more efficient, the government's stance is understandably self-serving. The market for EVs isn't that big, and if the U.S. wants the loan money returned, they need GM and Chrysler to build vehicles they can sell. Another reason is that the government doesn't want to get involved in making specific business decisions, and is deferring to the management teams at both companies on these issues."

The administration's position came to light after Chrysler disbanded its electric vehicle development group, citing costs and technology limits. Ron Bloom, the head of the government task force charged with restructuring GM and Chrysler earlier this year, told Reuters, "We obviously would be very happy if Chrysler and GM were making lots and lots of high mileage cars. It's not a prerequisite. It's not an obligation."

While there won't be a strict mandate for electric cars from the government, the administration can push for its agenda for more efficient cars in other ways, Autoblog Green reports. "One way the government can get cleaner cars to the market is to raise [Corporate Average Fuel Economy] CAFE standards, which they did earlier this year."

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